December Increase in Construction Jobs Largest in Two Years

Construction employers added 30,000 jobs in December while the industry's unemployment rate hit 13.5 percent, according to an analysis of new federal data released today by the Associated General Contractors of America. Association officials noted that the monthly increase was the largest in nearly two years, driven primarily by increases in private sector demand for construction.

“Resurgent demand for new housing construction and modest growth in private commercial construction are helping create some new construction jobs,” said Ken Simonson, the association's chief economist. “Now that the threat of the fiscal cliff has been – temporarily – relieved, construction employment should continue to slowly rise in 2013.”

Construction firms employed 5.564 million people in December, up from 5.534 million in November, Simonson noted, an increase of 0.5 percent. However, the sector's overall employment in December was only 18,000, or 0.3 percent, higher than one year earlier when firms employed 5.546 million workers. The industry unemployment rate fell from 16 percent a year earlier, indicating that formerly unemployed construction workers are leaving the industry at a faster rate than they are being rehired.

Both residential and nonresidential construction added jobs in December, with residential construction outpacing nonresidential construction for the month. Residential construction added 18,100 jobs in December, with residential building contractors adding 5,800 employees and residential specialty contractors adding 12,300 new workers. Residential construction employment is now up by 29,800, or 1.5 percent, compared to 12 months ago.

Nonresidential contractors added 11,900 jobs (0.3 percent) in December but are down by 12,400 jobs (-0.4 percent) compared to one year ago. Nonresidential specialty trade contractors added 5,600 jobs for the month while nonresidential building contractors added another 7,000 jobs. However, heavy and civil engineering construction firms lost 700 jobs during the month, dragged down by continuing cutbacks in government infrastructure spending.

Association officials said the growth in construction employment was likely restrained by uncertainties about what federal tax and spending levels would be in 2013 as Washington officials worked to address the pending fiscal cliff. They noted that the stopgap measure passed early in January would do little to resolve broader fiscal problems that are making it increasingly difficult for the federal government to invest in vital infrastructure projects.

“Until Washington can address the broader challenge of out-of-control entitlement spending we are going to see more political standoffs like the fiscal cliff and fewer investments in infrastructure,” said Stephen E. Sandherr, the association’s chief executive officer. “Congress and the administration need to focus their energy on addressing the fiscal imbalances that are the root cause of these recurring political crises.”